How Much Home Equity Have You Gained? The Answer Might Surprise You
Have you ever stopped to think about how much wealth you’ve built simply by being a homeowner? As home values continue to rise, so does your net worth. If you’ve been living in your home for a few years (or longer), there’s a good chance you’re sitting on more equity than you realize.
What Is Home Equity?
Home equity is the difference between your home’s market value and the amount you owe on your mortgage. For example, if your home is worth $500,000 and you owe $200,000, you have $300,000 in equity. This equity represents the wealth you’ve built through homeownership, and right now, homeowners across the country are experiencing record amounts of it.
According to Intercontinental Exchange (ICE), the average homeowner with a mortgage has $319,000 in home equity. Let’s explore why this number has grown so significantly.
Why Have Homeowners Gained So Much Equity?
Two key factors have contributed to the rise in home equity:
Significant Home Price Growth
Home prices have increased dramatically in recent years. According to the Federal Housing Finance Agency (FHFA), home prices nationwide have risen by 57.4% over the past five years. This appreciation means your home is likely worth far more now than when you first purchased it.
Longer Tenure in Homes
Data from the National Association of Realtors (NAR) shows that homeowners are staying in their homes for longer periods, with the typical tenure being around a decade. This extended time allows for even greater appreciation in home values, directly boosting equity. Over the past decade, the average homeowner has accumulated $201,600 in wealth solely from price appreciation, according to NAR.
The Benefits of Having Home Equity
So, what does this mean for you? It means your home might be your biggest financial asset, offering exciting opportunities for your future. Here are a few ways you can leverage your equity:
Moving to Your Next Home
Your equity can help cover the down payment for your next property. In some cases, it might even enable you to buy your next home outright with cash.
Financing Home Improvements
Are you thinking about upgrading your kitchen, adding a home office, or tackling other renovation projects? Your equity can provide the funds needed to increase your home’s value and enhance your living experience.
Starting a Business
Have you been dreaming of starting your own business? Your home equity could be the financial kickstart you need, providing funds for startup costs, equipment, or marketing.
Bottom Line
Whether you’re considering selling, upgrading, or exploring new opportunities, your home equity is a powerful resource. If you’re curious about how much equity you’ve built or how you can use it to achieve your goals, connect with a trusted real estate professional today. They can help you understand your options and make the most of your investment.